PIERRE, S.D. – The South Dakota Public Utilities Commission this week approved an agreement to allow Montana-Dakota Utilities Co. to revise rates for natural gas service to generate nearly $900,000 in additional annual revenue. The commission also approved the consolidation of the company's two South Dakota service and rate areas, known as the Black Hills area and the East River area, into one. The commission voted on the issue at an ad hoc meeting in Pierre, S.D., on Oct. 31, 2013.

As a result of the rate approval, a typical residential MDU natural gas customer in the Black Hills area will experience an average increase of approximately $2 per month and a similar customer in the East River area will see an average decrease of approximately $2 per month. Going forward, MDU customers will pay the same rates, in each of the various classes, throughout the state.

MDU's request filed with the commission in December 2012 requested authority to revise rates to bring in an additional $1.5 million annually. Company officials and PUC staff negotiated the case and agreed to reduce the additional annual revenue amount by more than $600,000.

The company cited investments in its natural gas system as the primary reason for the overall rate increase. MDU's last rate increase for the East River area was granted by the PUC in 2005 and in 2004 for the Black Hills area.

"Any rate request, regardless of the size, is of highest concern," stated PUC Chairman Gary Hanson. “The compromise to reduce the original rate request and the blending of the east and west customers saved significant costs to the consumers. It is a solid plan that is fair to ratepayers and contributes to the integrity of MDU's gas system," he said.

Vice Chairman Chris Nelson commented about the consolidation of the company's rate areas into one jurisdiction. “At first, I was skeptical of this concept," Nelson said. “However, as I reviewed the documents and testimony, and even the company's history of rate cases, I understood the consolidation will lead to greater efficiency and ultimately drive down costs for all customers," he concluded.

Commissioner Fiegen commended MDU's representatives and the commission staff for working together to develop a settlement to the case. “I truly appreciate the expertise and commitment of all parties to this rate case. I can clearly see that ratepayer concerns and reliable service were always at the forefront of the negotiations," she said.

In accordance with state law, MDU implemented interim rates in July 2013 based on the company's original request. Interim rates were applicable to customers in the company's Black Hills service area only. Because the approved rate increase is less than the interim increase, the company will refund its Black Hills area customers the difference with interest.

MDU provides natural gas service to approximately 54,800 customers in the Black Hills and eastern South Dakota including the communities of Fort Pierre, Gettysburg, Ipswich, Mobridge, Onida, Pierre, Roscoe and Selby.